Brexit, manufacturing and industry 4.0

July 10, 2018

Currently the news around Brexit is inescapable. With the so-called soft-Brexit Chequers deal proposed by Prime Minister Theresa May causing havoc within the Government and panic across the country, what does this actually mean for one of the industries set to be the most affected? The manufacturing industry.

The facts

As we well know, much around Brexit – whether hard, soft or non-existent – is conjecture. So, let’s have a look at the facts and the current position for the manufacturing industry.

The UK Trade Policy Observatory reported in February that some of the versions of Brexit under consideration could cut British exports by over a third in some manufacturing sectors

This isn’t good news.

The current position with big-name manufacturers

We’ve also recently heard certain noises from manufacturers with bases in the UK, which would make a post-Brexit world look very different to the one we know today.

Both BMW (8,000 UK employees) and Airbus (14,000 UK employees) have hinted at moves away from the UK due to the uncertainty surrounding Brexit. BMW’s chief in the UK, Ian Robertson said it would soon make “contingency plans” without clarity over Brexit in the next couple of months.

He also said the fact there’s currently no settlement is “making the UK less competitive, in a very competitive world right now. That is a decisive issue that ultimately could damage the industry.”

We’ll look at the “competitiveness” aspect later on.

Airbus’ CEO Tony Williams said they are “frustrated and concerned by the situation and particularly the lack of clarity”. They’ve also published a risk assessment and warned that a non-amicable Brexit would lead to “severe disruption and interruption of UK production”.

And here’s where the problem lies for UK manufacturers. A loss of trade as we know it to the EU will severely disrupt UK production. There’s no doubt about it.

So, where does this leave UK manufacturers? As has often been the case throughout Brexit, promises have been made and funds are set to be allocated, without any specific confirmation.

However, very important promises were made in January of this year. There could yet be a silver lining for the UK manufacturing industry. And as with anything set to positively impact the industry, it centres on tech and specifically industry 4.0.

The Government’s Modern Industrial Strategy

The post-Brexit modern industrial strategy, first outlined in January, would see the government taking a more active role in investing in the industrial sector to boost productivity and growth.

So, what does this mean in plain English? According to a Green Paper published around the same time, the Government would do the following:

Develop digital infrastructure and improve access to finance and management skills to boost business growth

In April this year, the Government launched the Industrial Strategy Challenge Fund, the purpose of which is to provide £1billion worth of funding to develop cutting-edge technologies. These will be aimed at creating jobs and boosting living standards.

Will the upshot of Brexit be that the UK manufacturing industry will actually be more competitive in such a competitive sector through strides made into industry 4.0?

Could be.

The challenge for traditional manufacturers

For traditional manufacturers and complex organisations, the challenge remains as to the best way to ready their business for industry 4.0 and ensure they are in the right place to take advantage of what’s on offer.

This is easier said than done for many large-scale organisations that don’t have the agility and ease to incorporate transformation tech into their operations. But change they must.

The second difficulty for UK-based manufacturers is predicting the future. Will this actually come to fruition or will the economy take even more of a nose-dive?

Currently the economic situation isn’t good, the uncertainty around Brexit is already having an impact, but their operations could be enhanced to the next level if the technology, education and skills set is there. For many businesses it’s currently a big “if”.